Content

RESOLVED:
 
To authorise  the award of a
5 year contract with a total value of 
£2,746,129 for the provision of hosting and maintenance of
the e5 financial system and associated applications and services
via the Crown Commercial Services framework RM6194.
 
Reason(s) For
Decision / Options Appraisal
 
5.1 The Council uses the e5 platform (known
locally as Cedar) and its associated applications as its core
Financial System. The applications provide the basis for ensuring
accurate budget monitoring, prompt collection of sundry income,
payment of suppliers and correct accounting processes. It is
important that we have the right systems and robust support
services in place to ensure continuous reliability and availability
to meet the Council’s needs and also to plan for future
growth and development of the system.
 
5.2  The current contract for the hosting and
management of the e5 application and associated functions with the
Incumbent supplier expires on 31 March 2024. There is no provision
for an extension of the current contract and therefore a new
contract is required to ensure continuity of service of the
financial system and associate functions.
 
5.3  The Council has used various versions of the
e5 platform which has been extensively developed by the vendor both
in terms of functionality and underlying technology. Hackney has
made a significant financial and resource investment to ensure the
application delivers on our core needs and priorities. During the
current contract we have upgraded to version 5.6 which gives us the
ability to access the system securely over the internet and removes
the reliance on the Hackney infrastructure. We have implemented
Version 1 software that integrates with e5 to view embedded pdf
versions of all documents produced by the system e.g. PO’s,
Invoices, remittances and statements. This has enabled users to
directly access these documents from within the e5 system, whereas
previously they used a convoluted process that would take a few
days to deliver the documents. In addition, Fiscal was also
deployed as a forensic / antifraud detection tool. This benefits
the Council by detecting duplicate payments made to suppliers and
any potential fraudulent payments in the system. By working with
the software vendor we have helped them further develop the
application, and many of the enhancements that were originally
bespoke to Hackney have now become part of the core product.
 
5.3  e5 has proved to be resilient and reliable
both in terms of its data integrity and system availability which
is currently at 99.7%.
 
5.4  In 2020 the Council contracted to migrate
from another hosting provider (Daisy) to the Incumbent supplier and
also to upgrade the e5 platform to the latest version. The
migration from Daisy to the Incumbent supplier was based on
financial savings of circa £1M. The upgrade was delayed due
to the Covid19 pandemic and the Cyber Attack, and went live with
the Incumbent supplier in 2021. The benefits of this investment
have only been realised over the last two years and they would
continue to be realised in the new contract.
 
5.5  During the current contract we have
benefited by moving to an internet facing solution in line with the
Councils web first strategy. This has reduced the previous reliance
and associated costs of using the separate AWS Appstream service (which provides a virtualised
Windows application environment and attracts additional separate
costs) for users to access the application. During the course of
the new contract there will be an opportunity to explore moving to
the supplier’s Software as a Service (SaaS) solution of the
e5 platform. This would further follow the Council’s web
first strategy with SaaS solutions being the preferred option. It
also allows for incremental product enhancements which are deployed
seamlessly. As the supplier's SaaS solution is based on the e5
platform we would benefit from minimal disruption to users with no
requirement for major process changes or training.
 
5.6  If during the term of the contract the
opportunity to upgrade the software and/or a move to the supplier's
SaaS version of the platform becomes an option, it will be
evaluated and may become a contract variation that will be subject
to the appropriate governance.
 
5.7  The e5 platform delivers all of the
Council's core requirements for a financial system, however it is
recognised that periodic reviews of those requirements and market
testing of available alternatives are required.
 
5.8  During the course of the current contract
there was an intention to carry out user research and a discovery
exercise to determine the future requirements for the financial
system. This was put on hold due to the Covid 19 pandemic and Cyber Attack which diverted
resources to other priorities.
 
5.9  We have carried out some soft market
research to support this procurement. This included:
 
One local government organisation who were
required to change their financial system due to it reaching end of
life (no longer being supported). This authority carried out a full
tender exercise which received tender submissions from nine
suppliers. The authority weighted quality and cost as a 50% split
and the e5 platform came in first place for both quality and cost
and was selected by the organisation. Their procurement process has
taken over 18 months and the implementation is about to start.
Another London Borough moved to the e5
platform from Oracle having carried out a similar tender exercise
which compared full enterprise solutions (ERP comprising HR/Payroll
and Finance) with ‘best of breed’ solutions (separate
systems which specialise in the relevant service processes), and
chose the e5 platform as ‘best of breed’ for
Finance.
 
Whilst direct comparisons are difficult, this
soft research shows that the e5 platform has been a positive choice
for similar organisations who have carried out competitive
tendering. This reinforces our belief that the e5 platform
continues to offer value for money for Hackney and will continue to
be developed and meet our needs for the next 5 years.
 
Market research and past experience shows that
it could take upward of 3 years to carry out a discovery, proceed
with a full tender exercise and then implement a new system if
required. Therefore there was not enough
time to complete this within the current contract. Any attempt to
rush through a review that resulted in a change of platform could
have resulted in significant risk to the Council of not completing
the implementation in time. In addition, the migration and
implementation costs are estimated to be in excess of £2M,
which will need to be budgeted for as part of the Council’s
financial planning.
 
It is envisioned that during the course of the
new 5 year contract a full discovery will take place within the
first two years of the contract, allowing time to review options
and, if required, carry out a tender exercise and implementation
process if a new system is preferred. An indicative timetable for a
future discovery, procurement and implementation is detailed in the
table below
 
Proposed
activity
Estimated delivery
date
Agree action plan
with terms of reference for discovery and market exploration
September 2024
Carry out discovery
- including identifying and mapping current and future user and
service requirements
May 2025
Map discovery
outcomes to current and alternative  systems and providers and undertake market
research
Jan 2026
Decision point on
future procurement route
Mar 2026
Procurement process
as required (Tender, framework call off, etc, including governance)
Mar 2027
If required
implementation of new contract deliverables (Allowance of 22
months) Jan 2029
 
 
By agreeing a 5 year contract the Council has
secured a discounted rate over a similar 4
year contract. The discount is equivalent to 4.7% by year 4.
Using the ‘Back Office Supplier’ contract framework,
the Council has the flexibility to give 365 days notice on the
contract prior to the end of the full 5 year term. In those
circumstances any discount given by the supplier would need to be
reimbursed.
 
KPIs will be used to manage the contract and
provision has been made within the new contract to allow for
service credits if the supplier is unable to maintain platform
availability at the desired level.
 
Alternative Options (Considered and
Rejected)
 
Based on soft research and past experience it
could take upward of 3 years to carry out a discovery, proceed with
a full tender exercise and then implement a new financial system if
required. Due to the Covid 19 pandemic
and the Cyber Attack, resources across the Council were diverted to
priority tasks and not available to start the discovery process
early enough to ensure that any new implementation could be
completed by the end of the current contract. Starting this process
late in a contract would represent a very high risk to the Council
and was therefore discounted.
 
There is no option to host the e5 platform
in-house as Hackney has adopted a web first and cloud strategy for
security and cost reasons, and does not have capacity to host a
large finance system in-house. Therefore
the only option available is to procure a 3rd party provider for
the hosting and maintenance of the e5 cloud based platform.
 
Currently, there is no alternative managed
service provider other than Supplier ‘A’  who are offering
to host and manage the e5 application.